Court rejects class action against bank

A class action against
Bendigo and Adelaide Bank
by investors who lost money in the collapse of failed agribusiness group
Great Southern
has been thrown out by the Supreme Court.

Justice Clyde Croft of the Victorian Supreme Court ruled in favour of the bank yesterday, although he left the door open for investors to file an amended claim.

The decision is a blow to investors and law firm Macpherson + Kelley, which initiated the action against Bendigo and Adleaide as the first of a series of cases in a bid to recover money lost in the demise of Great Southern. The agribusiness group collapsed in May 2009 under a mountain of debt.

Investors who borrowed to invest in the group wanted loans provided by Bendigo and Adelaide and other lenders declared void.

The bank’s chief executive, Mike Hirst, lauded the court’s decision as a major victory for the lender.

“[Macpherson + Kelley] has spent the past 15 months preparing its claim, which one could assume it believed was its strongest argument against the bank," he said.

“However, that argument has failed and now it will need to think of new arguments if it is to pursue a class action on behalf of its clients."

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“There is more information that we can provide. The Victorian Supreme Court has already given permission for us to deliver an amended statement of claim and we will be doing that."

Some 2000 investors have signed up to be involved in the planned series of class actions.

Bendigo and Adelaide is owed about $450 million by customers who borrowed to invest in Great Southern. Many have refused to repay the loans.

The bank, which has launched legal proceedings against some borrowers who have refused to pay, said last night it would write to customers urging them to meet their loan obligations.

“If borrowers have discontinued repayments pending the outcome of the class actions, [the] judgment supports our view that the loans are valid, so now is the time for them to consider the benefits of bringing their loan up to date," Mr Hirst said.

“We have an obligation to all our stakeholders to recover monies loaned to investors in these schemes and we will set out to do so."

The court will decide on Friday a deadline by which Macpherson + Kelley will have to file an amended claim.